Mastercard, Inc. and Mastercard International, Inc. are known throughout the world for their electronic payment network, which processes payments made with Mastercard-brand debit, credit, and prepaid cards. Many US consumers buy goods in other countries and pay for them with their Mastercards. But the complaint for this class action alleges that the rates Mastercard charges for foreign exchange (FX) on these payments are unfair, not in good faith, and at times fictional.
The Nationwide Class is all persons or entities with Mastercard payment cards who made a transaction in a foreign currency using that card, within the applicable statute of limitations wherein the exchange rate imposed was not a government-mandated one. In the alternative, a North Carolina Class has been proposed.
Mastercard does not issue cards to consumers directly. It allows financial institutions to issue the cards, while it sets some of the rules and remains in the picture as the processor for the transactions. The banks or other financial institutions pass these rules on to their customers with Cardholder Agreements.
The complaint alleges that the Mastercard Rules and Cardholder Agreements tell cardholders “that the foreign exchange (‘FX’) rates applied to consumer payment card transactions in foreign currencies for each day will either be wholesale FX market rates or a government-mandated rate. The vast majority of jurisdictions do not have government-mandated rates.” The complaint alleges that this is not true and that the rates “do not represent rates available in the wholesale FX market.”
That’s not all. The complaint claims that “even when the FX rates imposed by Mastercard are within the trading ranges of the individual currencies within the wholesale market for the applicable dates, the methods by which the rates are imposed are unfair, in bad faith, and therefore in violation of the Mastercard Rules and the Cardholder Agreements.”
Cardholders expect that the rates will bear some resemblance to the rates charged to Mastercard or the banks when they process the transactions. “In fact, however,” the complaint claims, “the banks and Mastercard rarely engage in wholesale market transactions to facilitate the cardholders’ transactions.” Instead, the complaint claims, Mastercard settles many of these transactions in US dollars, so that there is no currency exchange at all.
“Even in transactions that Mastercard actually settles in foreign currencies,” the complaint alleges, “the need for currency exchange is minimal. Mastercard is engaged in multilateral global transactions on a massive scale (i.e., doing multiple transactions in both directions—e.g., U.S. Dollars to Euros, and Euros to U.S. Dollars).” This means that Mastercard always has a large supply of various currencies, so that it only needs to exchange currencies to settle any net balances.
“In sum,” the complaint claims, “the FX rates [that] Mastercard imposes and that banks charge cardholders for foreign transactions are largely a fiction and represent a non-transparent charge.”
Article Type: LawsuitTopic: Consumer
Most Recent Case Event
Mastercard Foreign Exchange Rates Imposed on Cardholders Complaint
July 9, 2021
Mastercard, Inc. and Mastercard International, Inc. are known throughout the world for their electronic payment network, which processes payments made with Mastercard-brand debit, credit, and prepaid cards. Many US consumers buy goods in other countries and pay for them with their Mastercards. But the complaint for this class action alleges that the rates Mastercard charges for foreign exchange (FX) on these payments are unfair, not in good faith, and at times fictional.
Mastercard Foreign Exchange Rates Imposed on Cardholders ComplaintCase Event History
Mastercard Foreign Exchange Rates Imposed on Cardholders Complaint
July 9, 2021
Mastercard, Inc. and Mastercard International, Inc. are known throughout the world for their electronic payment network, which processes payments made with Mastercard-brand debit, credit, and prepaid cards. Many US consumers buy goods in other countries and pay for them with their Mastercards. But the complaint for this class action alleges that the rates Mastercard charges for foreign exchange (FX) on these payments are unfair, not in good faith, and at times fictional.
Mastercard Foreign Exchange Rates Imposed on Cardholders Complaint